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Europe opposed to lower U.S. taxes | |||
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By DAVID MOON, Moon Capital Management During the United Nations debate about Security Council resolutions, French vetoes and the threat of war, I wondered about the sovereignty of the United States and who should make decisions about our national security. There was, of course, plenty of debate about whether or not our actions in Iraq are security-related or inspired by some sinister motivations - such as money, oil, revenge or plain power hunger. (Personally, I subscribe to the notion that our national security interests are served by removing the Iraqi regime - although I hate the term "homeland security." It sounds too European.) If our elected civilian officials conclude that military action is necessary to fulfill their constitutional responsibilities, what practical difference does it make what someone in Estonia thinks of the action? Sure, it's nice to be liked by everybody - but not at the expense of violating your principles as responsibilities. I was going to keep this opinion to myself (a decision you may already have determined would have been more prudent), until last week, when the US Senate drastically rolled back the tax reduction plan proposed by the president and already passed by the House. The Senate's action was almost exactly that proposed by the heads of the European Central Bank (ECB) little more than a month ago. In a meeting in France on February 22, ECB president, Wim Duisenberg attacked president Bush's proposed $690 billion tax cut, saying the plan "endangered the world economy." Greek finance minister Nikos Christodoulakis, said the plan would have significant ramifications well beyond the US itself. It is tempting to think the French and other would-be US economic advisors are afraid declining US tax collections might reduce the amount of aid their countries receive from the US. But their much bigger motivation is that their own high-tax systems create a more difficult worldwide playing field for their countries, especially compared to the relative low taxes in the US. The top personal tax rate is 54 percent in France. The average "value added tax" is 19 percent of the cost of purchased goods. Is it any wonder these countries would prefer we not expand our competitive capital advantage? The US has plenty of help right here at home in proposing and passing stupid ways to reallocate other peoples' money. Bill Frist disappointed me this week when he announced the airline industry was about to receive another federal bailout. How about the investment industry? Shouldn't we (and you) receive some compensation for the investor anxiety of the last six months as we led up to this war? The airline industry - in total - has posted a cumulative operating loss since its inception. Providing another bailout package is, I am sure, political fodder to accomplish some other legislative agenda. We have too many influences in our own country pulling our resources in silly and useless directions. The last thing we need is the US Senate taking its cue from a bunch of European finance ministers about how to structure our tax code. David Moon is president of Moon Capital Management, a Knoxville-based investment management firm. This article originally appeared in the News Sentinel (Knoxville, TN).
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